Sweden's central bank on Wednesday decided to retain the benchmark repo rate at 1 percent as expected, but made a downward adjustment to its future interest rate path.
The Executive Board of the Riksbank said increases in the rate are not expected to begin until the second half of 2014.
The board now expects that inflation may take more time to reach the 2 percent target than earlier thought. Price growth remained very low at present due to weak demand in the economy, appreciation of the currency and low price mark-ups by companies.
The board acknowledged that developments in the euro area are a source of uncertainty, as are developments in the exchange rate and the companies' possibility to pass on costs to consumers.
The central bank lowered its inflation forecast, but lifted the economy's growth outlook. Riksbank now expects inflation to be 0.1 percent this year, weaker than February's forecast of 0.4 percent. In 2014, inflation is projected to rise to 1.4 percent, but still below the previous expectation of 2.1 percent.
While the headline inflation is forecast to reach 2.7 percent in 2015, the core inflation is expected to rise to 2 percent.
The gross domestic product is forecast to grow 1.4 percent this year, slightly faster than 1.2 percent forecast in February. For 2014, the GDP outlook was maintained at 2.7 percent. The forecast for 2015 was lifted to 3.5 percent from 3.1 percent previously projected.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.